BNP Paribas Arbitrage Issuance B.V.

Transcription

1 BNP Paribas Arbitrage Issuance B.V. (incorporated in The Netherlands) (as Issuer) BNP Paribas (incorporated in France) (as Issuer and Guarantor) Warrant and Certificate Programme This document (a Base Prospectus ) constitutes two base prospectuses: (i) the base prospectus for BNP Paribas Arbitrage Issuance B.V. and (ii) the base prospectus for BNP Paribas, in each case in respect of this Programme (as defined below). Any Securities (as defined below) issued on or after the date of this Base Prospectus are issued subject to the provisions herein. This does not affect any Securities issued before the date of this Base Prospectus. Under the terms of the Warrant and Certificate Programme (the Programme ), each of BNP Paribas Arbitrage Issuance B.V. ( BNPP B.V. ) and BNP Paribas ( BNPP or the Bank and, together with BNPP B.V., the Issuers and each an Issuer ) may from time to time issue warrants ( Warrants ) or certificates ( Certificates and, together with the Warrants, Securities ) of any kind including, but not limited to, Warrants or Certificates relating to a specified index or a basket of indices, a specified share or a basket of shares, a specified debt instrument or a basket of debt instruments, a specified currency or a basket of currencies or a specified commodity or a basket of commodities. Only BNPP may issue U.S. Securities (as defined below). Each issue of Warrants will be issued on the terms set out herein which are relevant to such Warrants under Terms and Conditions of the Warrants (the Warrant Conditions ) and each issue of Certificates will be issued on the terms set out herein which are relevant to such Certificates under Terms and Conditions of the Certificates (the Certificate Conditions and together with the Warrant Conditions, the Conditions ) and, in each case, on such final terms as will be set out in the final terms to be issued in respect of such Securities (the Final Terms ) a form of which is contained in this Base Prospectus. The Securities shall be governed by either English law ( English Law Warrants or English Law Certificates, as the case may be, and, together, the English Law Securities ) or French law ( French Law Warrants or French Law Certificates, as the case may be, and, together, the French Law Securities ), as specified in the relevant Final Terms, and the corresponding provisions in the Conditions will apply to such Securities. Only English Law Securities will be offered and sold in the United States. Securities issued by BNPP B.V. will be guaranteed by BNPP (in such capacity, the Guarantor ) pursuant to (i) a Deed of Guarantee, in respect of English Law Securities (the English Law Guarantee ) or (ii) a garantie, in respect of French Law Securities (the French Law Guarantee and, together with the English Law Guarantee, the Guarantees ), the forms of which are set out herein. Except in the case of U.S. Securities, each of BNPP B.V. and BNPP has a right of substitution as set out herein. A description of the Final Terms (which for the avoidance of doubt may be issued in respect of more than one series of Warrants or Certificates) is set out herein on page 25 and will specify with respect to each issue of Securities to which it relates, inter alia, the specific designation of the Securities, the aggregate number and type of the Securities, the date of issue of the Securities, the issue price, the underlying asset, index or other item(s) to which the Securities relate the exercise period or date (in the case of Warrants), the redemption date and whether they are interest bearing (in the case of Certificates), the governing law of the Securities, whether the Securities are eligible for sale in the United States and certain other terms relating to the offering and sale of the Securities. With respect to issues of English Law Securities, the Final Terms relating to such issue of Securities will be attached to the Global Security or Private Placement Definitive Securities (each as defined below). Each issue of Securities will entitle the holder thereof on due exercise (in the case of Warrants) or on the Redemption Date (in the case of Certificates) either to receive a cash amount (if any) calculated in accordance with the relevant terms or to receive physical delivery of the underlying assets (against payment of a specified sum in the case of Warrants), all as set forth herein and in the applicable Final Terms. Prospective purchasers of Securities should ensure that they understand the nature of the relevant Securities and the extent of their exposure to risks and that they consider the suitability of the relevant Securities as an investment in the light of their own circumstances and financial condition. Securities involve a high degree of risk and potential investors should be prepared to sustain a total loss of the purchase price of their Securities. See Risk Factors on page 14. In particular, the Securities and the Guarantees and, in the case of Physical Delivery Certificates or Physical Delivery Warrants (each as defined below) (together, the Physical Delivery Securities ), the Entitlement (as defined herein) to be delivered upon the exercise (in the case of Physical Delivery Warrants) or the redemption (in the case of Physical Delivery Certificates) of such Securities have not been, and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act ) or any state securities laws and trading in the Securities has not been approved by the Commodity Futures Trading Commission under the United States Commodity Exchange Act, as amended. Neither Issuer has registered as an investment company pursuant to the United States Investment Company Act of 1940, as amended (the Investment Company Act ). Unless otherwise specified in the applicable Final Terms, the Securities are being offered and sold pursuant to the registration exemption contained in Regulation S under the Securities Act. No Securities of such series, or interests therein, may at any time be offered, sold, resold, traded, pledged, exercised, redeemed, transferred or delivered, directly or indirectly, in the United States or to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the Securities Act) and any offer, sale, resale, trade, pledge, exercise, redemption, transfer or delivery made, directly or indirectly, within the United States or to, or for the account or benefit of, a U.S. person will not be recognised. The Securities of such series may not be legally or beneficially owned at any time by any U.S. person (as defined in the Offering and Sale section below) and accordingly are being offered and sold outside the United States to non-u.s. persons in reliance on Regulation S. BNPP only may also offer and sell Securities in the United States to persons it believes to be (i) qualified institutional buyers ( QIBs ) as defined in Rule 144A under the Securities Act ( Rule 144A ). In reliance on the exemption provided by Rule 144A and (ii) certain accredited investors ( AIs ) (as defined in Rule 501(a) under the Securities Act) in reliance upon the exemption provided by Section 4(2) of the Securities Act ( Section 4(2) ). Each purchaser of U.S. Securities within the United States is hereby notified that the offer and sale of such Securities is being made in reliance upon an exemption from the registration requirements of the Securities Act. For a description of certain further restrictions on offers and sales of the Securities and on the distribution of this Base Prospectus, see Offering and Sale below. U.S. Securities will, unless otherwise specified in the Final Terms, be sold through BNP Paribas Securities Corp., a registered broker-dealer. Hedging transactions involving Physical Delivery Securities may not be conducted unless in compliance with the Securities Act. See Terms and Conditions of the Warrants and Terms and Conditions of the Certificates below. The Securities are not insured by the Federal Deposit Insurance Corporation. Application may be made for Securities issued under the Programme to be listed and admitted to trading on the Regulated Market or the EuroMTF Market (in each case, as defined below) operated by the Luxembourg Stock Exchange. References in this Base Prospectus to the Luxembourg Stock Exchange (and all related references) shall include the Regulated Market and/or the EuroMTF Market, as the case may be (as specified in the applicable Final Terms). In addition, references in this Base Prospectus to Securities being listed (and all related references) shall mean that such Securities have been listed and admitted to trading on the Luxembourg Stock Exchange or, as the case may be, an ISD Regulated Market (as defined below). The Luxembourg Stock Exchange s Regulated Market is a regulated market for the purposes of the Investment Services Directive 93/22/EC (each such regulated market being an ISD Regulated Market ). This Base Prospectus may be used to list and have admitted to trading Securities on the regulated market Bourse de Luxembourg (the Regulated Market ) or the EuroMTF exchange regulated market (the EuroMTF Market ), in each case of the Luxembourg Stock Exchange, pursuant to the Programme. The Programme provides that Securities may be listed on such further or other stock exchange(s) as the relevant Issuer may decide. The applicable Final Terms will specify whether or not Securities are to be listed and admitted to trading on the Luxembourg Stock Exchange and/or any other stock exchange(s). Each Issuer may also issue unlisted Securities. Registered Warrants will be unlisted. English Law Warrants which are issued and transferred through Clearstream Banking, société anonyme ( Clearstream, Luxembourg ) and/or Euroclear Bank S.A./N.V. as operator of the Euroclear System ( Euroclear ) ( Clearing System Warrants ) will be represented by a global warrant (each a Clearing System Global Warrant ) which will be issued and deposited with a common depositary on behalf of Clearstream, Luxembourg and Euroclear on the date of issue of the relevant Warrants. Registered English Law Warrants ( Registered Warrants ) will be represented by a registered global warrant (each a Registered Global Warrant ) which will be issued and deposited with the Registrar. Clearing System Warrants and Private Placement Definitive Warrants will not be exchangeable for Registered Warrants and Registered Warrants will not be exchangeable for Clearing System Warrants and Private Placement Definitive Warrants. Each issue of English Law Certificates will be represented by a global certificate (each a Global Certificate ) which will be issued and deposited with a common depositary on behalf of Clearstream, Luxembourg and Euroclear on the date of issue of the relevant Certificates. Except as described herein, no definitive Securities will be issued. Each Clearing System Global Warrant, Registered Global Warrant, and Global Certificate are each referred to as a Global Security. French Law Securities will be in bearer dematerialised form (au porteur) and will be inscribed (inscription en compte) in the books of Euroclear France which shall credit the accounts of the Holders (as defined in Terms and Conditions of the Warrants and Terms and Conditions of the Certificates ). No physical document of title will be issued in respect of French Law Securities. French Law Securities have been accepted for clearance through Euroclear France, Euroclear and/or Clearstream, Luxembourg. In the event that the Final Terms specify that Securities are eligible for sale in the United States ( U.S. Securities ), (A) the Securities sold in the United States to QIBs within the meaning of Rule 144A will be represented by one or more global Securities (each, a Rule 144A Global Security ) issued and deposited with (1) a custodian for, and registered in the name of a nominee of, The Depository Trust Company ( DTC ) or (2) a common depositary on behalf of Clearstream, Luxembourg or Euroclear, (B) the Securities sold in the United States under the exemption provided in Section 4(2) will be Issued and registered in definitive form (each, a Private Placement Definitive Security ) and (C) in either such case, Securities sold outside the United States to non-u.s. persons will be represented by a one or more global Securities (each, a Regulation S Global Security ) issued and deposited with a common depositary on behalf of Clearstream, Luxembourg and Euroclear. The date of this Base Prospectus is 18 October 2005.

2 RESPONSIBILITY STATEMENT Each of BNPP B.V. (in respect of itself) and BNPP (in respect of itself and BNPP B.V.) accepts responsibility for the information contained in this Base Prospectus. To the best of the knowledge of each of BNPP B.V. and BNPP (who have taken all reasonable care to ensure that such is the case), the information contained herein is in accordance with the facts and does not omit anything likely to affect the import of such information. Information contained in this Base Prospectus which is sourced from a third party has been accurately reproduced and, as far as the relevant Issuer is aware and is able to ascertain from information published by the relevant third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The relevant Issuer has also identified the source(s) of such information. 2

3 This Base Prospectus (together with supplements to this Base Prospectus from time to time (each a Supplement and together the Supplements ) comprises a base prospectus for the purposes of (i) Article 5.4 of Directive 2003/71/EC (the Prospectus Directive ) and (ii) the relevant implementing measures in the Grand Duchy of Luxembourg and, in each case, for the purpose of giving information with regard to the Issuer. In relation to each separate issue of Securities, the final offer price and the amount of such Securities will be determined by the Issuer and the relevant Dealers in accordance with prevailing market conditions at the time of the issue of the Securities and will be set out in the relevant Final Terms. The applicable Final Terms will (if applicable) specify the nature of the responsibility taken by the relevant Issuer and, if applicable, the Guarantor for the information relating to the underlying asset, index or other item(s) to which the Securities relate which is contained in such Final Terms. No person is authorised to give any information or to make any representation not contained in or not consistent with this document or any other information supplied in connection with the Programme and, if given or made, such information or representation must not be relied upon as having been authorised by BNPP B.V., BNPP or any manager of an issue of Securities, including BNPP Securities Corp. (as applicable to such issue of Securities, each a Manager ). This document does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation and no action is being taken to permit an offering of the Securities or the distribution of this document in any jurisdiction where any such action is required. This document is to be read and construed in conjunction with any Final Terms and with all documents which are deemed to be incorporated herein by reference (see Documents Incorporated by Reference on page 22). Warrants create options exercisable by the relevant holder or which will be automatically exercised as provided herein. There is no obligation on the Issuer to pay any amount or deliver any asset to any holder of a Warrant unless the relevant holder duly exercises such Warrant or such Warrants are automatically exercised and an Exercise Notice is duly delivered. The Warrants will be exercisable in the manner set forth herein and in the applicable Final Terms. In certain instances, the holder of a Warrant will be required to certify, inter alia (in accordance with the provisions outlined in Offering and Sale below) that it is not a U.S. person or exercising such Warrant on behalf of a U.S. person. Upon transfer, exchange or exercise of a U.S. Warrant (as defined below), the holder may, in certain circumstances, be required to certify that the transfer, exchange or exercise, as the case may be, is being made to, or on behalf of, a person whom the holder reasonably believes is not a U.S. person or is a QIB or an AI, as applicable, who acquired the right to such transfer, exchange or the benefit of such exercise in a transaction exempt from the registration requirements of the Securities Act. The proposed transferee may also be required to deliver an investment letter as a condition precedent to such proposed transfer or exchange. Certificates shall be redeemed on the redemption date by payment of the Cash Settlement Amount (in the case of Cash Settled Certificates) and/or by delivery of the Entitlement (in the case of Physical Delivery Certificates). In order to receive the Entitlement, the holder of a Certificate will be required to certify, inter alia (in accordance with the provisions outlined in Condition 7(B)(1) of Terms and Conditions of the Certificates ), that it is not a U.S. person or acting on behalf of a U.S. person. Upon transfer or exchange of a U.S. Certificate (as defined below), the holder may, in certain circumstances, be required to certify that the transfer or exchange, as the case may be, is being made to a person whom the transferor or exchangor reasonably believes is not a U.S. person or is a QIB or an AI, as applicable, who acquired the right to such transfer or exchange in a transaction exempt from the registration requirements of the Securities Act. The proposed transferee may also be required to deliver an investment letter as a condition precedent to such proposed transfer or exchange. 3

4 The Securities of each issue may be sold by the relevant Issuer and/or any Manager at such time and at such prices as the Issuer and/or the Manager(s) may select. There is no obligation upon the Issuer or any Manager to sell all of the Securities of any issue. The Securities of any issue may be offered or sold from time to time in one or more transactions in the over-the-counter market or otherwise at prevailing market prices or in negotiated transactions, at the discretion of the Issuer. Subject to the restrictions set forth herein, each Issuer shall have complete discretion as to what type of Securities it issues and when. No Manager has separately verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility is accepted by any Manager as to the accuracy or completeness of the information contained in this Base Prospectus or any other information provided by BNPP B.V. and/or BNPP. The Managers accept no liability in relation to the information contained in this Base Prospectus or any other information provided by BNPP B.V. and/or BNPP in connection with the Programme. BNPP B.V. and BNPP have not investigated, and do not have access to information that would permit them to ascertain, whether any company that has issued equity, debt or other instruments to which any U.S. Securities relate in a passive foreign investment company for U.S. tax purposes. Prospective investors in any U.S. Securities that are U.S. taxpayers should consult their own advisers concerning U.S. tax considerations relevant to an investment in such U.S. Securities. Neither this Base Prospectus nor any other information supplied in connection with the Programme (i) is intended to provide the basis of any credit or other evaluation or (ii) should be considered as a recommendation by BNPP B.V., BNPP or any Manager that any recipient of this Base Prospectus or any other information supplied in connection with the Programme should purchase any Securities. Each investor contemplating purchasing any Securities should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of BNPP B.V. and/or BNPP. Neither this Base Prospectus nor any other information supplied in connection with the Programme constitutes an offer or an invitation by or on behalf of BNPP B.V. or BNPP or the Managers or any other person to subscribe for or to purchase any Securities. This Base Prospectus does not constitute an offer of, or an invitation by or on behalf of BNPP B.V., BNPP or any Manager to subscribe for or purchase any securities. The delivery of this Base Prospectus does not at any time imply that the information contained herein concerning BNPP B.V. or BNPP is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. No Manager undertakes to review the financial condition or affairs of BNPP B.V. or BNPP during the life of the Programme. Investors should review, inter alia, the most recently published audited annual non-consolidated financial statements of BNPP B.V. and/or the most recently published audited annual consolidated financial statements and unaudited semi-annual interim consolidated financial statements of BNPP, when deciding whether or not to purchase any Securities. The distribution of this Base Prospectus and the offering of Securities in certain jurisdictions may be restricted by law. Persons into whose possession this Base Prospectus comes are required by BNPP B.V., BNPP and each Manager to inform themselves about and to observe any such restrictions. In this Base Prospectus references to U.S.$ and U.S. dollars are to United States dollars and references to euro, and EUR are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended. 4

5 FOR NEW HAMPSHIRE RESIDENTS ONLY: NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. AVAILABLE INFORMATION So long as any of the U.S. Securities are restricted securities within the meaning of Rule 144(a)(3) under the Securities Act, and BNPP is not subject to and in compliance with Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act ), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, BNPP has undertaken to furnish to each Holder or beneficial owner of U.S. Securities and to any prospective purchaser, any information required to be delivered under Rule 144A(d)(4) under the Securities Act. FORWARD-LOOKING STATEMENTS The sections of this Base Prospectus from, and including BNP Paribas Group to, but excluding, Clearing Systems below (such sections being the BNP Paribas Disclosure ) contain forward-looking statements. BNP Paribas and the BNP Paribas Group (being BNP Paribas together with its consolidated subsidiaries, the Group ) may also make written or oral forward-looking statements in their audited annual financial statements, in their interim financial statements, in their offering circulars, in press releases and other written materials and in oral statements made by their officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Bank s and/or Group s beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made, and the Bank and the Group undertake no obligation to update publicly any of them in light of new information or future events. PRESENTATION OF FINANCIAL INFORMATION Most of the financial data presented in the BNP Paribas Disclosure are presented in euros. The Group began presenting its financial information in euros as of the advent of the euro on 1 January Any reference in the BNP Paribas Disclosure to the Financial Statements is to the consolidated financial statements, including the notes thereto, of the Bank and its consolidated subsidiaries as of and for the years ended 31 December 2004, 2003 and The Financial Statements are prepared in accordance with generally accepted accounting principles in France ( French GAAP ). The Group s fiscal year ends on 31 December, and references in the BNP Paribas Disclosure to any specific fiscal year are to the twelve-month period ended 31 December of such year. 5

6 The Group, like all companies with securities listed on European securities exchanges, is required by European Union directives to adopt international financial reporting standards ( IFRS ) as of 1 January 2005, with retroactive effect to 1 January The Group has prepared and published financial statements with respect to the year ended 31 December 2004 in accordance with IFRS then in effect, and has published a simulation of the effect on its 2004 financial statements of the application of IFRS as endorsed by the European Union (which applies to financial statements for periods subsequent to 1 January 2005). For a summary of these financial statements and a discussion of the Group s transition to IFRS, investors should refer to the section entitled Transition to International Financial Reporting Standards. In the BNP Paribas Disclosure, all references to billions are references to one thousand million. Due to rounding, the numbers presented throughout the BNP Paribas Disclosure may not add up precisely, and percentages may not reflect precisely absolute figures. 6

7 TABLE OF CONTENTS SUMMARY... 8 RISK FACTORS DOCUMENTS INCORPORATED BY REFERENCE FORM OF FINAL TERMS TERMS AND CONDITIONS OF THE WARRANTS TERMS AND CONDITIONS OF THE CERTIFICATES USE OF PROCEEDS FORM OF THE ENGLISH LAW GUARANTEE FORM OF THE FRENCH LAW GUARANTEE GENERAL DESCRIPTION OF THE PROGRAMME DESCRIPTION OF BNP PARIBAS ARBITRAGE ISSUANCE B.V BNP PARIBAS GROUP RECENT DEVELOPMENTS MANAGEMENT OF THE BANK BOOK-ENTRY CLEARANCE SYSTEMS TAXATION U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF NOTICE TO PURCHASERS AND HOLDERS OF U.S. SECURITIES AND TRANSFER RESTRICTIONS OFFERING AND SALE GENERAL INFORMATION Page 7

8 SUMMARY This summary must be read as an introduction to this Base Prospectus. Any decision to invest in any Securities should be based on a consideration of this Base Prospectus as a whole, including the documents incorporated by reference, by any investor. The Issuers may have civil liability in respect of this summary, if it is misleading, inaccurate or inconsistent when read together with the other parts of this Base Prospectus. Where a claim relating to information contained in this Base Prospectus is brought before a court in a European Economic Area State (an EEA State ), the plaintiff may, under the national legislation of the EEA State where the claim is brought, be required to bear the costs of translating this Base Prospectus before the legal proceedings are initiated. Words and expressions defined in Risk Factors, in the applicable Conditions (each below) and in the applicable Final Terms shall have the same meanings in this summary. Issuers Guarantor Description of BNPP B.V. Description of BNPP BNP Paribas Arbitrage Issuance B.V. ( BNPP B.V. ) BNP Paribas ( BNPP ) BNP Paribas BNPP B.V. is a limited company under Dutch law ( besloten vennootschap met beperkte aansprakelijkheid ). BNPP B.V. was incorporated on 10 November Its objects are: (i) to borrow, lend out and collect monies, including but not limited to the issue of debentures, share purchase warrants, certificates of debt and other securities or debt instruments, to issue and acquire financial instruments of any nature and to enter into related agreements; (ii) to finance enterprises and companies; (iii) to establish and to in any way participate in, manage and supervise enterprises and companies; (iv) to offer advice and to render services to enterprises and companies with which the company forms a group of companies, and to third parties; (v) to grant security, to bind the company and to encumber assets of the company for the benefit of enterprises and companies with which the company forms a group of companies, and of third parties; (vi) to acquire, manage, exploit and dispose of registered property and asset value in general; (vii) to trade in currencies, securities and asset value in general; (viii) to exploit and trade in patents, trademark rights, licences, know-how and other industrial rights of ownership; and (ix) to engage in industrial, financial and commercial activities of any nature, and all other things as may be deemed incidental or conducive to the attainment of the above objects, in the broadest sense of the word. The Group is one of the top global players in financial services, 8

9 conducting retail, corporate and investment banking, private banking, asset management, insurance and specialised and other financial activities throughout the world. According to rankings published in July 2004 by The Banker (based on 2003 figures): (i) based on total assets, the Group was the second largest banking group in France, the fifth largest in Europe, and the seventh largest in the world; and (ii) based on Tier 1 capital, the Group was the second, fourth and tenth largest banking group in France, Europe and the world, respectively. The Group is a leading European provider of corporate and investment banking products and services and a leading provider of private banking and asset management products and services throughout the world. It provides retail banking and financial services to over 20 million individual customers throughout the world, in particular in Europe and the western United States. The Group has offices in more than 85 countries. At 31 December 2004, the Group had consolidated assets of billion (compared to billion at 31 December 2003), consolidated gross total customer items of billion (compared to billion at 31 December 2003), consolidated customer deposits (including retail and negotiable certificates of deposit) of billion (compared to billion at 31 December 2003) and shareholders equity (Group share including income for the 2004 fiscal year) of 30.2 billion (compared to 28.3 billion at 31 December 2003). Net income, before taxes, non-recurring items and amortisation of goodwill for the year ended 31 December 2004 was 7.6 billion (compared to 6.3 billion for the year ended 31 December 2003). Net income, Group share, for the year ended 31 December 2004 was 4.7 billion (compared to 3.8 billion for the year ended 31 December 2003). The Bank currently has long-term senior debt ratings of Aa2 with stable outlook from Moody s Investors Service, Inc. ( Moody s ), AA with stable outlook from Standard and Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc. ( Standard & Poor s ) and AA with stable outlook from Fitch Ratings. Moody s has also assigned the Bank a Bank Financial Strength rating of B+ and Fitch Ratings has assigned the Bank an individual rating of A/B. The Group has three divisions: Retail Banking, Asset Management and Services and Corporate and Investment Banking. Operationally, these divisions are organised into five core businesses (French Retail Banking, International Retail 9

10 Description of the Programme Risk Factors Banking and Financial Services, Asset Management and Services, Corporate and Investment Banking and BNP Paribas Capital). Except where otherwise specified, all financial information and operating statistics are presented as of 31 December Warrant and Certificate Programme There are certain factors that may affect each Issuer s ability to fulfil its obligations under Securities issued under the Programme. These are set out under Risk Factors below and include the following risk factors related to the Bank, its operations and its industry: (i) Unforeseen events can interrupt the Bank s operations and cause substantial losses and additional costs. (ii) Four main categories of risks are inherent to the Bank s activities: Credit Risk. Credit risk is the risk of financial loss relating to the failure of an obligor to honour its contractual obligations. Market and Liquidity Risk. Market risk is the risk related to earnings, which arises primarily from adverse movements of trading and non-trading market parameters. Liquidity risk, which is also referred to as funding risk, is the inability of the Bank to meet its obligations at an acceptable cost in a given currency and location. Operational Risk. Operational risk corresponds to the risk of losses due to inadequate or failed internal processes, or due to external events, whether deliberate, accidental or natural occurrences. Insurance Risk. Insurance risk is the risk to earnings due to mismatches between expected and actual claims. (iii) An interruption in or a breach of the Bank s information systems may result in lost business and other losses. (iv) The Bank is subject to extensive supervisory and regulatory regimes in France, elsewhere in Europe, the US, the Asia Pacific region and in the many countries around the world in which it operates. (v) The Group s businesses and earnings can be affected by the fiscal or other policies and other actions of various regulatory authorities of France, other European Union or foreign governments and international agencies. The nature and impact of future changes in such policies and 10

11 regulatory action are not predictable and are beyond the Group s control. The following risk factors relate to BNPP B.V.: BNPP B.V. is not an operating company. BNPP B.V. s sole business is the raising and borrowing of money by issuing Securities or other obligations. BNPP B.V. has, and will have, no assets other than such fees (as agreed) payable to it, or other assets acquired by it, in each case in connection with the issue of Securities or entry into other obligations relating to the Programme from time to time. The net proceeds from each issue of Securities issued by the Issuer will become part of the general funds of BNPP B.V. BNPP B.V. may use such proceeds to maintain positions in options or futures contracts or other hedging instruments ( Hedging Agreements ). The ability of BNPP B.V. to meet its obligations under Securities issued by it will depend on the receipt by it of payments under the relevant Hedging Agreements. Consequently, BNPP B.V. is exposed to the ability of counterparties in respect of such Hedging Agreements to perform their obligations under such Hedging Agreements. In addition, there are certain factors which are material for the purpose of assessing the risks related to the Securities issued under the Programme, including the following: (i) High degree of risk: the Securities involve a high degree of risk, which may include, among others, interest rate, foreign exchange, time value and political risks. Prospective purchasers of Securities should recognise that their Securities may expire worthless. (ii) Securities are Unsecured Obligations: the Securities are unsubordinated and unsecured obligations of the relevant Issuer and will rank pari passu with themselves. The obligations of BNPP under the Guarantees are unsubordinated and unsecured obligations of BNPP and will rank pari passu with all its other present and future unsubordinated and unsecured obligations, subject as may from time to time be mandatory under French law. (iii) Risks with regard to interim value of Securities: The interim value of the Securities varies with the price level of the reference index (or basket of indices), share (or basket of shares), debt instrument (or basket of debt instruments), currency (or basket of currencies), commodity (or basket of commodities) or other basis of reference as specified in the applicable Final Terms, as well as by a number of other interrelated factors. (iv) Certain Considerations Regarding Hedging: it may not be possible to purchase or liquidate securities in a 11

12 portfolio at the prices used to calculate the value of any relevant index, share, debt security, currency, commodity, or basket. (v) Effect of Credit Rating Reduction: a reduction in the rating, if any, accorded to outstanding debt securities of BNPP B.V. or BNPP by any rating agency could result in a reduction in the trading value of the Securities. (vi) Additional Risk Factors Associated with Currency Securities: Fluctuations in exchange rates of the relevant currency (or basket of currencies) will affect the value of Currency Securities. Purchasers of Currency Securities risk losing their entire investment if exchange rates of the relevant currency (or basket of currencies) do not move in the anticipated direction. (vii) Possible Illiquidity of the Securities in the Secondary Market: it is not possible to predict the price at which Securities will trade in the secondary market or whether such market will be liquid or illiquid. A decrease in the liquidity of an issue of Securities may cause, in turn, an increase in the volatility associated with the price of such issue of Securities. To the extent that an issue of Securities becomes illiquid, an investor may have to exercise or wait until redemption of such Securities, as applicable, to realise value. (viii) Potential Conflicts of Interest: BNPP B.V., BNPP and their affiliates (including, if applicable, any Manager) may engage in activities which could present certain conflicts of interest, could influence the prices of such shares or other securities and could adversely affect the value of such Securities. (ix) Limitations on Exercise of Warrants: if so indicated in the Final Terms, the Issuer will have the option to limit the number of Warrants exercisable on any date (other than the final exercise date) to the maximum number specified in the Final Terms and, in conjunction with such limitation, to limit the number of Warrants exercisable by any person or group of persons (whether or not acting in concert) on such date. (x) Minimum Exercise Amount of Warrants: if so indicated in the Final Terms, a holder must tender or, in the case of automatic exercise, hold, a specified number of Warrants at any one time in order to exercise. Thus, holders with fewer than the specified minimum number of Warrants will either have to sell their Warrants or purchase additional Warrants, incurring transaction costs in each case, in order to realise their investment. Furthermore, 12

13 Warrants Certificates Currencies Governing Law holders of such Warrants incur the risk that there may be differences between the trading price of such Warrants and the Cash Settlement Amount (in the case of Cash Settled Warrants) or the Physical Settlement Value (in the case of Physical Delivery Warrants) of such Warrants. (xi) Time Lag after Exercise of Warrants: in the case of any exercise of Warrants, there will be a time lag between the time a holder gives instructions to exercise and the time the applicable Cash Settlement Amount (in the case of Cash Settled Warrants) relating to such exercise is determined. The applicable Cash Settlement Amount may change significantly during any such period, and such movement or movements could decrease the Cash Settlement Amount of the relevant Warrants and may result in such Cash Settlement Amount being zero. Please see Risk Factors below for further details. Warrants may be issued as Index Warrants, Share Warrants, Debt Warrants, Currency Warrants, Commodity Warrants or any other or further type of warrants as is specified in the applicable Final Terms. Certificates may be issued as Index Certificates, Share Certificates, Debt Certificates, Currency Certificates, Commodity Certificates or any other or further type of certificates as is specified in the applicable Final Terms. Any. The Securities and any related Guarantee will be governed by English or French Law as specified in the applicable Final Terms. 13

14 RISK FACTORS Prospective purchasers of the Securities offered hereby should consider carefully, among other things and in light of their financial circumstances and investment objectives, all of the information in this Document and, in particular, the risk factors set forth below (which each Issuer, in its reasonable opinion, believes represents or may represent the risk factors known to it which may affect such Issuer s ability to fulfil its obligations under the Securities) in making an investment decision. Investors may lose the value of their entire investment in certain circumstances. FACTORS RELATING TO THE BANK, ITS OPERATIONS AND THE BANKING INDUSTRY Unforeseen events can interrupt the Bank s operations and cause substantial losses and additional costs. Unforeseen events like severe natural catastrophes, terrorist attacks or other states of emergency can lead to an abrupt interruption of the Bank s operations, which can cause substantial losses. Such losses can relate to property, financial assets, trading positions and to key employees. Such unforeseen events can also lead to additional costs (such as relocation of employees affected) and increase the Bank s costs (such as insurance premiums). Such events may also make insurance coverage for certain risks unavailable and thus increase the Bank s risk. Four main categories of risks are inherent to the Bank s activities Credit Risk. Credit risk is the risk of financial loss relating to the failure of an obligor to honour its contractual obligations. Credit risk arises in lending activities and also in various other activities where the Bank is exposed to the risk of counterparty default, such as its trading, capital markets and settlement activities. Market and Liquidity Risk. Market risk is the risk related to earnings, which arises primarily from adverse movements of trading and non-trading market parameters. Trading market parameters include, but are not limited to, foreign exchange rates, bond prices, security and commodity prices, derivatives prices and prices of other marketable assets such as real estate or cars. Trading market parameters also include derivations of the items previously mentioned, such as interest rates, credit spreads, implied volatility or implied correlation. Non-trading market parameters include parameters based on assumptions or on statistical analysis, such as models and statistical correlation, respectively. Liquidity is also an important component of market risk. In instances of little or no liquidity, a market instrument or transferable asset may not be negotiable at its estimated value. A lack of liquidity can arise due to a lack of volume, legal restrictions or a one-way market. Market risk arises in trading portfolios and in non-trading portfolios. In non-trading portfolios, it encompasses: The risk associated with asset and liability management, which is the risk to earnings arising from asset and liability mismatches in the banking book or in the insurance business. This risk is driven primarily by interest rate risk. The risk associated with investment activities, which is directly connected to changes in the value of invested assets within equity portfolios. The risk associated with certain other activities, such as real estate or car leasing, which is indirectly affected by changes in the value of negotiable assets held during the normal course of business. 14

15 Liquidity risk, which is also referred to as funding risk, is the inability of the Bank to meet its obligations at an acceptable cost in a given currency and location. Operational Risk. Operational risk corresponds to the risk of losses due to inadequate or failed internal processes, or due to external events, whether deliberate, accidental or natural occurrences. Internal processes include, but are not limited to, human resources and information systems. External events include floods, fires, earthquakes or terrorist attacks. Insurance Risk. Insurance risk is the risk to earnings due to mismatches between expected and actual claims. Depending on the insurance product, this risk is influenced by macroeconomic changes, changes in customer behaviour, changes in public health, pandemics and catastrophic events (earthquake, industrial disaster, terrorism, etc.). It is important to distinguish between the different categories of risk because each category requires specific measuring and monitoring systems. Nevertheless, the growing complexity of the Group s businesses and products means that the categories of risk increasingly overlap. An interruption in or a breach of the Bank s information systems may result in lost business and other losses. As with most other banks, the Bank relies heavily on communications and information systems to conduct its business. Any failure or interruption or breach in security of these systems could result in failures or interruptions in the Bank s customer relationship management, general ledger, deposit, servicing and/or loan organisation systems. The Bank cannot provide assurances that such failures or interruptions will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures or interruptions could have a material adverse effect on the Bank s financial condition and results of operations. The Bank is subject to extensive supervisory and regulatory regimes in France, elsewhere in Europe, the US, the Asia Pacific region and in the many countries around the world in which it operates. Regulatory compliance risk arises from a failure or inability to comply fully with the laws, regulations or codes applicable specifically to the financial services industry. Non-compliance could lead to fines, public reprimand, damage to reputation, enforced suspension of operations or, in extreme cases, withdrawal of authorisation to operate. The Group s businesses and earnings can be affected by the fiscal or other policies and other actions of various regulatory authorities of France, other European Union or foreign governments and international agencies. The nature and impact of future changes in such policies and regulatory action are not predictable and are beyond the Group s control. Other areas where changes could have an impact include, inter alia: the monetary, interest rate and other policies of central banks and regulatory authorities; general changes in government or regulatory policy that may significantly influence investor decisions in particular markets in which the Group operates; general changes in regulatory requirement, for example, prudential rules relating to the capital adequacy framework; changes in the competition and pricing environment; changes in the financial reporting environment; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; and 15

16 other unfavourable political, military or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for the Group s products and services. Each of France s and the global financial services market remains highly competitive and innovative competition comes both from incumbent players and a steady stream of new markets entrants. The landscape is expected to remain highly competitive in all the Group s businesses, which could adversely affect the Group s profitability. RISK FACTORS RELATING TO BNPP B.V. BNPP B.V. is not an operating company. BNPP B.V. s sole business is the raising and borrowing of money by issuing Securities or other obligations. BNPP B.V. has, and will have, no assets other than such fees (as agreed) payable to it, or other assets acquired by it, in each case in connection with the issue of Securities or entry into other obligations relating to the Programme from time to time. The net proceeds from each issue of Securities issued by the Issuer will become part of the general funds of BNPP B.V. BNPP B.V. may use such proceeds to maintain positions in options or futures contracts or other hedging instruments ( Hedging Agreements ). The ability of BNPP B.V. to meet its obligations under Securities issued by it will depend on the receipt by it of payments under the relevant Hedging Agreements. Consequently, BNPP B.V. is exposed to the ability of counterparties in respect of such Hedging Agreements to perform their obligations under such Hedging Agreements. RISK FACTORS RELATING TO SECURITIES The Securities involve a high degree of risk, which may include, price risks associated with the Underlying Reference (as defined below), among others, interest rate, foreign exchange, time value and political risks. Prospective purchasers of Securities should recognise that their Securities may expire worthless or be redeemed for no value. Purchasers should be prepared to sustain a total loss of the purchase price of their Securities. This risk reflects the nature of a Security as an asset which, other factors held constant, tends to decline in value over time and which may become worthless when it expires or is redeemed. See Certain Factors Affecting the Value and Trading Price of Securities below. Prospective purchasers of Securities should be experienced with respect to options and option transactions, should understand the risks of transactions involving the relevant Securities and should reach an investment decision only after careful consideration, with their advisers, of the suitability of such Securities in light of their particular financial circumstances, the information set forth herein and the information regarding the relevant Securities and the particular reference index (or basket of indices), share (or basket of shares), debt instrument (or basket of debt instruments), currency (or basket of currencies), commodity (or basket of commodities) or other basis of reference to which the value of the relevant Securities may relate, as specified in the applicable Final Terms (such reference being the Underlying Reference ). The risk of the loss of some or all of the purchase price of a Security upon expiration or redemption means that, in order to recover and realise a return upon his or her investment, a purchaser of a Security must generally be correct about the direction, timing and magnitude of an anticipated change in the value of the Underlying Reference which may be specified in the applicable Final Terms. Assuming all other factors are held constant, the lower the value of a Security and the shorter the remaining term of a Warrant to expiration or a Certificate to redemption, the greater the risk that purchasers of such Securities will lose all or part of their investment. With respect to Certificates and European-style Warrants, the only means through which a holder can realise value from the Warrant or Certificate, as the case may be, prior to its Exercise Date or Redemption Date in relation to such Warrant or Certificate, as the case may be, is to sell it at its then market price in an available secondary market. See Possible Illiquidity of the Securities in the Secondary Market 16